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Indian equity markets have experienced a significant rally since Diwali 2023, yielding solid returns for investors. From November 12, 2023, the BSE Sensex surged 25%, while the BSE Midcap and Smallcap indices soared by 49% and 47%, respectively. This remarkable growth has primarily been fueled by strong domestic fund inflows, which continue to support positive market sentiment.
As the festive season approaches, JM Financial has revealed its top 10 stock picks for Samvat 2081, aimed at helping investors capitalize on the market opportunities of Diwali 2025. Mark your calendars: the special one-hour Muhurat trading session will take place on Friday, November 1, from 6:15 p.m. to 7:15 p.m. If you’re looking to position your portfolio for growth, these stock ideas might light the way.
Reliance Industries
Reliance Industries has lagged behind broader market performance in CY24 YTD, delivering just a 5% return compared to the Nifty 50’s 15%. However, JM Financial anticipates a reversal in this underperformance, driven by quicker-than-expected telecom tariff hikes, a recovery in the retail segment, and favorable developments in the new energy business. The brokerage expects strong earnings momentum across all divisions, projecting a 15% compound annual growth rate (CAGR) in profit after tax (PAT) from FY24 to FY27.
Power Grid Corporation of India
JM Financial views Power Grid’s valuation as attractive, trading at 3.1 times its FY26E price-to-book value. The stock offers a healthy dividend yield of approximately 4% and limited earnings risk due to its regulated return structure. Crucially, the firm sees a robust rebound in the transmission capex cycle. Power Grid is expected to sustain a return on equity (ROE) of 18% during fiscal years 2024–26.
Bajaj Finance
Bajaj Finance has posted a robust 20% recovery over the past two months, fueled in part by the successful IPO of its housing finance subsidiary. Despite the recent rally, analysts see further upside potential. The company has consistently achieved strong AUM growth of over 25% year-over-year (YoY) over the last 2–3 years. In Q1 FY25, a slight moderation in growth was observed as Bajaj Finance shifted its focus from unsecured to secured lending, in line with the RBI’s sector-wide guidance. With the festive season approaching, Q3FY25 is expected to be a strong quarter for AUM expansion. JM Financial remains optimistic, highlighting the company’s diversified asset mix and long-term growth strategy.
- Strategic shift to secured lending ensures better asset quality amid tightening regulations on unsecured loans.
- Festive demand in Q3FY25 is expected to drive seasonal growth and further support AUM momentum.
ICICI Lombard General Insurance
ICICI Lombard stands out in the health and motor insurance segments, backed by a comprehensive product portfolio, a growing retail agency network, robust digital capabilities, and a well-diversified distribution strategy. Its disciplined underwriting approach, strong reinsurance framework, and sizable balance sheet provide a competitive edge. These strengths have positioned the company as a market leader in a fast-evolving and high-growth industry. Notably, the company ensured a smooth leadership transition following a 14-year tenure as CEO—highlighting the organization’s depth and stability. This is reflected in its consistent performance and over 15% returns, driven by strategic adjustments to customer preferences and market dynamics.
Jindal Steel & Power
Jindal Steel & Power (JSPL), a prominent name in India’s steel industry, currently operates with a production capacity of 9.6 million tonnes per annum (mtpa). The company is executing a strategic capital expenditure plan aimed at boosting crude steel capacity by 65% to 15.9 million tonnes per annum (mtpa). This expansion not only scales up production but also diversifies and enhances the product mix. JSPL is simultaneously focusing on stronger raw material integration and increasing its share of value-added products (VAPs), a strategy expected to drive margin improvement. JM Financial projects the company will achieve an EBITDA of ₹15,000 per tonne by FY26. With a net debt/EBITDA ratio of 0.9x, JSPL maintains one of the strongest balance sheets among its domestic peers.
National Aluminium Company
NALCO’s EBITDA for Q2 FY25 is projected to triple year-over-year to approximately ₹1,200 crore. Stronger alumina and aluminum prices, reduced costs, and the benefits of captive coal mining drive this growth. The company’s estimated EBITDA for FY27 stands at ₹6,000 crore. Applying an EV/EBITDA multiple of 7.5x and factoring in an estimated FY26 net cash of ₹3,500 crore, the resulting equity valuation is ₹48,500 crore—or ₹264 per share. At the current market price of ₹227, the stock trades at a compelling 6.8x FY26E EBITDA and offers a healthy dividend yield of 3%.
Gravita India
Gravita India, a key player in the Indian recycling sector, operates across three primary verticals: lead, aluminum, and plastics. The company is actively expanding into new segments, including steel, paper, and lithium-ion battery recycling. It stands as one of India’s largest lead recyclers, with the lead vertical contributing 82% to its FY24 EBITDA of ₹343 crore. Aluminum and plastic segments added 5% and 4%, respectively, while turnkey projects contributed 9%.
Microtech Developers
Macrotech Developers (Lodha) is poised for strong operating cash flow generation thanks to increasing collections catching up with pre-sales growth. Key financial projections:
- Expected average annual OCF of ₹7,000–₹8,000 crore over the next three years
- Sufficient surplus cash projected for debt reduction
- Growth investments in business development are already factored into forecasts.
Electra Greentech
Electra Greentech stands as one of India’s leading electric bus manufacturers. The company is setting up a state-of-the-art greenfield manufacturing facility in Hyderabad, initially capable of producing 5,000 units annually, with the potential to scale up to 10,000 units. Partial operations have already begun at the new plant, focusing on the production of electric buses and other electric vehicle (EV) products. Over the next two financial years, production ramp-up will become more evident.
In Q1 FY25, Olectra delivered 156 electric buses. Management expects this number to double in Q2 FY25 and projects deliveries of over 1,000 buses in the second half of FY25. This would translate to a total of 1,800–2,000 units for the whole year, marking a remarkable annual growth of nearly 300%. Looking ahead, the company aims to double volumes again in FY26E, targeting an eight-fold increase in production compared to FY24 levels over the next two years.
Ashoka Buildcon
Ashoka Buildcon is poised for strong financial growth, with an expected PAT CAGR of 33% over the forecast period of FY2024–FY2026E. The company is projected to deliver a return on equity (ROE) of 10% by the end of FY26. Currently, the stock is trading at 15.3 times its fiscal year 2026 estimated standalone EPS.
JM Financial assigns a valuation of 12x September FY26E core EPS to Ashoka’s EPC business, 1.6x price-to-book (P/B) for its HAM (Hybrid Annuity Model) portfolio, and 0.5x P/B for other ABL assets.
FAQs
What is Muhurat trading, and why is it important?
Muhurat Trading is a special one-hour session conducted on Diwali. It is considered auspicious for starting new investments and often sees symbolic buying by traders.
Why has the Indian stock market rallied since Diwali 2023?
Strong domestic fund inflows, improved earnings outlooks, favorable policy decisions, and growing investor confidence have fueled the rally.
How does JM Financial select its top stock picks for Diwali?
JM Financial evaluates fundamental metrics, valuation, sector performance, future earnings potential, and macroeconomic trends to recommend high-conviction stock ideas.
Are these stock recommendations suitable for long-term investment?
Yes, many picks, such as Reliance Industries, Power Grid, and Bajaj Finance, are chosen for their multi-year growth potential and robust fundamentals.
How should retail investors use these Diwali stock picks?
Retail investors can utilize these picks to rebalance their portfolios, diversify their holdings, and align with high-growth sectors, ideally with a long-term investment horizon.
Conclusion
JM Financial’s Diwali 2025 stock recommendations offer a strategic roadmap for capitalizing on India’s market momentum. From industry giants to niche growth plays each pick is underpinned by sound fundamentals and promising forecasts. As the Muhurat trading session approaches, investors have a timely opportunity to refine their portfolios and embrace potential long-term gains. With strong market sentiment and robust corporate performance, these top 10 stock ideas could serve as a guiding light for the new year, Samvat 2081.
